Government Loan Modification

Government Loan Modifications Isn't The Only Assistance Out There

Did you suffer at the hands of the dreaded foreclosure process between the first of January 2009 and the 31st of December 2010? If you felt the foreclosure was unjustly forced upon you and should not have been as your situation didn’t legally merit it, you may be able to get compensation thanks to a new Independent foreclosure review which is being carried out with the assistance of two governmental agencies.

Participating Lenders

Not all lenders are actually participating in the review, so you’ll need to check that your lender features on the list below to determine whether you’re eligible for a review.

America’s Servicing Co., Aurora Loan Services, BAC Home Loans Servicing, Bank of America, Beneficial, Chase, Citibank, CitiFinancial, CitiMortgage, Countrywide, EMC, EverBank/EverHome Mortgage Company, Financial Freedom, GMAC Mortgage, HFC, HSBC, IndyMac Mortgage Services, MetLife Bank, National City Mortgage, PNC Mortgage, Sovereign Bank, SunTrust Mortgage, U.S. Bank, Wachovia, Washington Mutual, Wells Fargo, Wilshire Credit Corporation.

Deceptive Loan Practices You Could Be Compensated For

This is not an exhaustive list of the practices you could be awarded compensation for, but does cover some of the main ones.

Foreclosures forced on members of the armed forces whilst they were away on active duty. This is classed as a breach of the Civil Relief Act and eligible persons could receive a compensation of $125,000 plus a monetary amount equal to the value of the equity they held in their home at the time of foreclosure.

If you didn’t actually default on your mortgage loan but a foreclosure was still pushed through, you may be eligible. If you qualify you would be entitled to a payout of $125,000 plus the value of equity you held if the foreclosure claimed your home or $15,000 if you recovered your home. If you managed to successfully stave off the foreclosure, you still could be in line for a payout of $5,000.

Borrowers who suffered a foreclosure as a direct result of errors made by the lender during the trial period of a mortgage modification. If the foreclosure occurred during or after this trial period you could qualify for a lump sum payment of $125,000 plus the monetary equivalent to the equity you held in the property at the time. Even if you recovered your home, you could still get a payout of $15,000.

If you attempted to get a modification on your loan and were incorrectly turned away, or your application never received a response you could be due a compensation equal to the amount of excess interest you paid out up to a maximum of $15,000.

What To Do Next?

Is The Government Assisting On Underwater Mortgages?

Since the housing market crashed with an almighty thud back in 2007, the number of underwater mortgages has soared. Today we find ourselves in a situation where nearly 1 out of every 3 homeowners has an underwater mortgage. A recent survey showed that these homeowners owe around $75k more than they could actually sell their property for in today’s market.

So What Exactly Is An Underwater Mortgage?

An underwater mortgage is one that has an outstanding balance that is greater than the market value of the home. So if you had a home valued at $200,000 and you still owed $250,000 in mortgage payments that would be an underwater mortgage.

What Are Your Options If You Have An Underwater Mortgage?

Stay put. I know it might be frustrating throwing your hard earned money at a house that you don’t technically own a square centimeter of but you need a place to live and if you can afford to keep paying the mortgage installments, why not stay in your own home. You do have to realize that it’ll be an extremely long time until you actually own it, but if that doesn’t bother you then this is a decent option.

Rent out the property. This could be an option for you. Rather than paying your underwater mortgage off, get another family to do it for you. If the rental rate you could get for your property exceeds the amount needed for the mortgage repayments and any taxes then it’s a realistic option. You could then move out into a cheaper rental property and start saving up a little nest egg.

Short sell your home. You can’t just go ahead and do this; your lender has to agree first. This basically involves selling the home for less than the outstanding balance left on your mortgage, and the lender accepting you won’t be able to cover the difference and consequently forgiving the remaining debt. You could still be charged tax on the difference though, which can be a substantial amount. On the plus side, a short sale looks a lot better on your credit report than a foreclosure would.

Get out of there. Sometimes staying put just drags you deeper and deeper into financial turmoil. In those instances cutting your losses and moving onto pastures new is the best option. If you’re considering this you do need to remember that a foreclosure will put a significant black mark on your credit report and you won’t be able to shake it off for a good 7 years. It will affect your ability to take out credit (typically only secured credit will be available to you) and could even impact on you chances when applying for jobs.

If you are an underwater mortgage holder, you don’t need to be ashamed, as there are millions of other homeowners in exactly the same position as you. You really need to take stock of your financials and work out which option makes the most financial sense.

Home Loan Modification and the Making Home Affordable Program

The following is a list of the current Home Loan Modification options offered under the MHA plan (taken from www.makinghomeaffordable.gov): Home Affordable Modification Program SM (HAMPSM), Principal Reduction Alternative SM (PRA), Second Lien Modification Program (2MP), FHA Home Affordable Modification Program (FHA-HAMP), USDA’s Special Loan Servicing, Veteran’s Affairs Home Affordable Modification (VA-HAMP), Home Affordable Foreclosure Alternatives Program (HAFA), Second Lien Modification Program for Federal Housing Administration Loans (FHA-2LP), Home Affordable Refinance Program (HARP), FHA Refinance for Borrowers with Negative Equity (FHA Short Refinance), Home Affordable Unemployment Program (UP), Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HHF)